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Stock Subscription Agreement for the United Kingdom

Stock Subscription Agreement Template for England and Wales

A Stock Subscription Agreement under English and Welsh law is a legally binding contract between a company and an investor, documenting the terms and conditions under which the investor agrees to purchase newly issued shares in the company. The agreement includes details of the subscription price, number of shares, completion mechanics, warranties, and various rights and obligations of the parties. It ensures compliance with the Companies Act 2006 and other relevant UK legislation.

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What is a Stock Subscription Agreement?

The Stock Subscription Agreement is a fundamental document used when a company wishes to issue new shares to an investor in exchange for capital investment. It is commonly used in funding rounds, private placements, and other capital raising exercises under English and Welsh law. The agreement sets out the terms of the investment, including the number and class of shares being issued, the subscription price, completion mechanics, and warranties given by both the company and the subscriber. It ensures compliance with UK company law requirements and provides legal certainty for both parties regarding their rights and obligations in relation to the share subscription.

What sections should be included in a Stock Subscription Agreement?

1. Parties: Identification of the company and subscriber(s)

2. Background: Context of the subscription and company information

3. Definitions: Key terms used throughout the agreement

4. Subscription: Details of shares being subscribed for and price

5. Completion: Timing and mechanics of the subscription

6. Warranties: Standard representations from both parties

7. Confidentiality: Provisions regarding confidential information

8. Governing Law: Specification of applicable law and jurisdiction

What sections are optional to include in a Stock Subscription Agreement?

1. Conditions Precedent: Pre-completion conditions, used when completion is subject to specific conditions being met

2. Board Appointment Rights: Rights to appoint directors, typically included for significant investments giving board representation

3. Tag-Along Rights: Rights to join in sale of shares, included for minority investor protection

4. Anti-dilution Provisions: Protection against future share issues, included for sophisticated investors requiring protection

What schedules should be included in a Stock Subscription Agreement?

1. Share Capital Structure: Details of existing and post-completion share capital

2. Warranties: Detailed company and business warranties

3. Completion Requirements: List of documents required at completion

4. Board Resolutions: Form of board resolutions approving the subscription

5. Disclosure Letter: Exceptions to warranties, if applicable

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

England and Wales

Publisher

Ƶ

Cost

Free to use
Relevant legal definitions




































Clauses






























Industries

Companies Act 2006: Primary UK legislation governing company law, covering share capital requirements, allotment procedures, directors' duties, pre-emption rights, and Companies House filing requirements

Financial Services and Markets Act 2000: Regulates financial services industry, including financial promotion restrictions, regulated activities, and prospectus requirements for share offerings

Companies (Model Articles) Regulations 2008: Provides standard articles provisions regarding share issuance and transfer restrictions that apply unless specifically modified

FCA Rules: Regulatory framework established by the Financial Conduct Authority covering disclosure requirements, prospectus rules, and regulated company obligations

UK Listing Rules: Rules applicable to listed companies, covering disclosure obligations and shareholder approval requirements

Income Tax Act 2007: Tax legislation relevant to share subscriptions and their income tax implications

Corporation Tax Act 2010: Tax legislation governing corporate aspects of share issuance and subscription

Stamp Duty Regulations: Regulations governing stamp duty and stamp duty reserve tax on share transfers and subscriptions

Market Abuse Regulation (MAR): Regulations preventing market abuse and insider trading in relation to share transactions

UK Corporate Governance Code: Best practice recommendations for listed companies regarding corporate governance and shareholder relations

PSC Regulations: Requirements for recording and reporting People with Significant Control in a company's share structure

Anti-Money Laundering Regulations 2017: Regulations requiring due diligence and verification of investors in share subscription transactions

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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